Xstrata Nickel denies US$100M tax dodge at Dominican mine

Santo Domingo.- The miner Xstrata Nickel Falcondo, which exploits ferronickel sites in central Monseñor Noel province, said a difference in prices between the reports submitted to the Dominican government and its parent company result from calculations made according to the operation period and isn’t an undervaluation which cuts tax payments.

The multinational’s clarification comes in the heels of a report sent to Presidency chief of staff Gustavo Montalvo, by attorney and mining expert Rafael Puello, who says the company has failed to pay around RD$4.0 billion (US$100 million) to the State in taxes and dividends.

Xstrata Nickel operations director Juan Faña , David Soares, of finance, and José Luis López, of External Affairs, disqualified Puello for making the statements and relate them to his lawsuit with the miner.

The report handed to Montalvo, which Internal Taxes (DGII) was apprised of three months ago, refers to an undervalued average price of nickel and of not reporting the other metals that form the extracted ferronickel ore. The alleged irregularity has resulted in the State failing to collect around RD$4.0 billion in recent years.

“To date we haven’t heard of any particular effort by the DGII aimed at investigating the allegations made by us,” said Puello in the document entitled “Report on billionaire tax fraud committed by Falcondo Dominican against the State,” of February 15.

According to the document, Falcondo’s ferronickel alloy contains iron (62%), nickel (37% approx.) and cobalt (0.93%), but the mining company has reported only the extraction of nickel, hiding the tax revenue from the sale of iron and cobalt.

Falcondo’s COO of clarified that the company sells nickel contained in ferronickel in laterites (nickel-ferrous), and cannot separate the iron and cobalt, so that benefit is obtained only by the concentration of nickel content of each pound, although the highest proportion of the material is iron (62%).

Faña said in other mines, which are sulfurous ferronickel, cobalt and iron can be separated and produce pure nickel, as in their Norway division.